Loading judgment…
No AI summary yet for this case.
Income Tax Appellate Tribunal, KOLKATA BENCH “B” KOLKATA
Before: Shri Mahavir Singh & Shri Waseem Ahmed
आदेश /O R D E R
PER Waseem Ahmed, Accountant Member:-
This appeal by the assessee is arising out of order of Commissioner of Income Tax (Appeals)-XXIV, Kolkata in appeal No.732/CIT(A)-XXIV/37(2)/09- 10 dated 28.03.2012. Assessment was framed by ITO Ward-37(2), Kolkata u/s 143(3) of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) vide his order dated 30.12.2009 for assessment year 2007-08.
Several grounds raised
by assessee in this appeal are relating to the disallowance of expenses on estimate basis by the AO on the ground that Mahendra Kr. Kaushik (Decd) v. ITO Wd-37(2) Kol. Page 2 assessee failed to furnish supporting/reliable evidence in support of those expenses. The details of such expenses are submitted as under : a) On account of Tour Expenses@20% Rs. 88,238/- b) On account of Staff Welfare @20% Rs. 1,18,497/- c) On account of Traveling expenses@20% Rs.1,44,800/- d) On account of Sales promotion@20% Rs.1,18,497/- e) On account of Paper roll@2% Rs. 89,051/- f) On account of Soft wire training@20% Rs. 60,000/- g) On account of Software maintenance@5% Rs.1,07,199/- Besides the above, the AO also disallowed the following expenses : h) On account of Depreciation (Actual) Rs.1,85,700/- i) On account of Connectivity charges(Actual) Rs.3,59,144/- As regards the depreciation claimed .by assessee for an amount of ₹1,85,700/- the Assessing Officer disallowed the same by observing that assessee could not reconcile the depreciation against the purchase of new computers during the year 2006-07. Similarly, regarding the disallowance of the telephone charges, the AO found that the assessee is showing/ claiming the connectivity charges and telephone expenses simultaneously in the books of accounts. Therefore the AO disallowed the telephone expenses. All the disallowances were added to the total income of the assessee. Aggrieved, assessee preferred an appeal before Ld. CIT(A) who has reduced the expenses on estimation basis by giving some relief to assessee and in some cases the AO order was upheld, the details of the same is given as under : a) On account of Tour Expenses@10% (Partly relief) Rs. 44,119/- b) On account of Staff Welfare @10%(Partly relief) Rs. 59,249/- c) On account of Traveling expenses@10%(partly relief) Rs. 72,400/- d) On account of Sales promotion@10%(Partly relief) Rs. 59,249/- e) On account of Paper roll@2% (Upheld) Rs. 89,051/- f) On account of Software training@10%(Partly relief) Rs. 30,000/- g) On account of Software maintenance@5%(upheld) Rs.1,07,199/- In the following cases the order of the AO was upheld : a) On account of Depreciation (upheld) Rs.1,85,700/- b) On account of Connectivity charges(upheld) Rs.3,59,144/- Mahendra Kr. Kaushik (Decd) v. ITO Wd-37(2) Kol. Page 3
3. Aggrieved, assessee preferred second appeal before us on the following grounds of appeal:- “1. For that on the facts of the case, the order passed by the Ld. C.I.T.(A) is completely arbitrary, unjustified and illegal.
2. For that on the facts of the case, the Ld. CIT(A) was wrong in not allowing the addition made by the A.O on estimate basis Rs.44,119/- on account of Tour expenses which is completely arbitrary, unjustified and illegal.
3. For that on the facts of the case, the Ld. CIT(A) was wrong in not allowing the addition made by the AO on estimate basis Rs.59,249/- on account of staff welfare which is completely arbitrary, unjustified and illegal.
4. For that on the facts of the case, the Ld. CIT(A) was wrong in not allowing the addition made by the AO on estimate basis Rs.72,400/- on account of Travelling expenses which is completely arbitrary, unjustified and illegal.
5. For that on the facts of the case, the Ld. CIT(A) was wrong in confirming the addition made by the AO on account of depreciation amounting to Rs.1,85,700/- new computers which is completely arbitrary, unjustified and illegal.
6. For that on the facts of the case, the Ld. CIT(A) was wrong in not allowing the addition made by the AO on estimate basis Rs.59,249/- on account of Sales Promotion which is completely arbitrary, unjustified and illegal.
7. For that on the facts of the case, the Ld. CIT(A) was wrong in confirming the addition made by the AO on account of connectivity charges amounting to Rs.3,59,144/- which is completely arbitrary, unjustified and illegal.
8. For that on the facts of the case, the Ld. CIT(A) was wrong in confirming the addition made by the AO on Paper Roll consumption amounting to Rs.89,051/- which is completely arbitrary, unjustified and illegal.
9. For that on the facts of the case, the Ld. CIT(A) was wrong in not allowing the addition made by the AO on estimate basis of Rs.30,000/- on account of Software expenses which is completely arbitrary, unjustified and illegal.
Mahendra Kr. Kaushik (Decd) v. ITO Wd-37(2) Kol. Page 4 10. For that on the facts of the case, the Ld. CIT(A) was wrong in confirming the addition made by the AO on Software Maintenance amounting to Rs.1,07,199/- which is completely arbitrary, unjustified and illegal.
For that on the facts of the case, the Ld. CIT(A) was wrong in holding that no specific opportunity is required to be given in charging interest u/s 234B, according to him charging of interest is consequential.
Shri S.P. Chawdhary, Ld. Authorized Representative appearing on behalf of assessee and Md. Ghayas Uddin, Ld. Departmental Representative appearing on behalf of Revenue.
We have heard rival contentions of both the parties and perused the materials available on record. Ld. DR vehemently relied on the orders of authorities below. Ld. AR submitted the paper book running pages from pages 1 to 107. Ld. AR submitted that AO has disallowed the expenses on the estimate basis which is not acceptable as per the provisions of I.T. Act and claimed that all the expenses were incurred only in connection with business. The CIT(A) has also reduced the disallowance made by the AO on the basis of estimates without bringing any factual finding about the expenses. From the aforesaid discussion, we find that AO has disallowed the expenses as stated above under the heading a to g, on estimated basis and he has not brought anything concrete for making the disallowances. The reason for the disallowance was mentioned that the assessee failed to produce reliable voucher and produced only self made ledger and voucher. However we find that it was the duty of the assessee to maintain the sufficient record to justify the genuineness of the expenses. In view of the above we direct the AO to restrict the disallowance to the tune of 5% (1% in case of paper roll) of all the expenses including the connectivity expenses except the expenses claimed in the form of depreciation. Regarding the disallowance of depreciation expenses, we find from the audited financial statement that the assessee has purchased the computers for a value of Rs. 2,52,30,721/- and claimed the depreciation thereon. We find from the order of the lower authorities that the Mahendra Kr. Kaushik (Decd) v. ITO Wd-37(2) Kol. Page 5 disallowance was made and confirmed due to non production of the bill for the purchase of the computer. Before us the Ld. AR has not produced anything to controvert the findings of the lower authorities. Therefore we are inclined not to interfere in the order of CIT(A).